The UK's quarterly gross domestic product remained unchanged in the three months leading up to September, following growth in the previous two quarters, as final data from the Office for National Statistics has revealed. The ONS lowered its revisions for the second and third quarters by 0.1 percentage points, recording a growth of 0.4% and stagnation at 0%, respectively.
Notably, only nine out of 20 subsectors saw growth in the third quarter, a decline from the 11 reported in the flash estimate. Specifically, the services sector reported no growth, a shift from the initial estimate of a 0.1% increase. Retail trade, excluding motor vehicles and motorcycles, saw a notable rise of 1.4%; conversely, financial and insurance activities were the weakest performers, declining by 0.6%. Additionally, the contraction in the production sector deepened to 0.4%, compared to the preliminary reading of 0.2%.
This decline was primarily driven by a significant 2% drop in electricity, gas, steam, and air conditioning supply, alongside a 0.1% decrease in water supply, sewerage, waste management, and remediation activities. Manufacturing also experienced a slip of 0.1%, while mining and quarrying fell by 0.3%. Simultaneously, the construction sector's growth estimate was adjusted down to 0.7% from 0.8%, following three consecutive quarterly declines.
The boost in growth was largely attributed to infrastructure new work, which increased by 2.1%, while private housing repair and maintenance saw a steep decline of 6%. On an annual basis, the British economy recorded a growth of 0.9%, contrasting with the preliminary estimate of a 1% expansion and a prior increase of 0.7%. Looking ahead, the Bank of England has cautioned about potential weaker-than-expected growth by the end of 2024, revising its fourth-quarter GDP growth forecast to zero, down from a previously projected 0.3%.
The central bank's committee is divided between members concerned about inflationary pressures and those apprehensive of growth risks, prompting a cautious approach to changes in monetary policy. BofA Global Research anticipates that the next interest rate reduction will occur in February 2025, projecting the bank rate to settle at 3.5% by early 2026.
As of December 19, the central bank maintained its key interest rate at 4.75%..